Donald Trump's return to the White House is unlikely to offer much relief to Americans struggling with soaring home prices, stubbornly high mortgage rates, and growing housing costs, as his policies could make homebuilding more expensive and push mortgage rates even further up, experts told Newsweek.
The lack of affordability in the U.S. housing market has been a major issue during this election cycle and one that both candidates tried to address in their agenda, though in significantly different ways. While Kamala Harris promised to build millions of homes, offer financial aid to first-time buyers, and ease regulations on building, Trump suggested that through reducing illegal immigration he could free millions of homes for American citizens, reducing demand on the supply-tight market.
"Throughout the election, Trump has pointed to housing affordability as a big problem. He's said that he wants to lower mortgage rates and loosen building regulations to boost supply," Redfin's Head of Economic Research, Chen Zhao, told Newsweek. "He also wants to lower immigration to reduce housing demand and privatize the Government Sponsored Enterprises Fannie Mae and Freddie Mac," she added.
After Trump's victory on Wednesday and with Republicans taking back control of the Senate and potentially the House, "we're all in wait-and-see mode to see which economic policies he prioritizes first, and how those could collectively impact the housing market," Zhao said.
Newsweek contacted Trump's campaign team for comment by email on Friday morning.
Realtor.com Chief Economist Danielle Hale told Newsweek that "despite a strong mandate from voters, the impact on the housing market remains a toss-up." The main problem facing the housing market, a historic lack of supply caused by years of underbuilding after the financial crisis of 2007-2008, "is a shortage on the order of 2.5 - 7.2 million homes accumulated over the last decade," Hale said.
"This has contributed to a run-up in home prices and rents that have eroded affordability for both homebuyers and renters. The Republican Party platform and President-elect Trump on the campaign trail acknowledged these challenges, shining a light on problems that many voters face daily," she added.
"The proposals to tackle these challenges, however, are likely to have a mix of good and unintended, but negative, consequences for the housing market. In general, the supply side policies proposed by President-elect Trump are likely to help increase supply, but demand-focused proposals could have unintended negative consequences."
Here are three ways in which a second Trump's presidency could impact the U.S. housing market.
Higher Mortgage Rates
All experts Newsweek talked with agree that mortgage rates are likely to rise in the short to medium term after Trump takes office on January 20, 2025.
"In the short run, mortgage rates could rise due to less focus on budget deficit and extending and expanding tax cuts," Lawrence Yun, Chief Economist and Senior Vice President of Research at the National Association of Realtors (NAR), told Newsweek.
"If government spending can be restrained in combination with the tax cut or the economy booms, then the Federal Reserve cuts will make a bigger impact on lowering mortgage rates," he added.
At the moment, mortgage rates are still inching up week by week despite the Federal Reserve's recent decisions to cut its key interest rate. As of November 7, according to Freddie Mac, the weekly average current 30-year fixed mortgage rate was 6.79 percent, up 0.07 percent from a week earlier, but down 0.71 percent from a year earlier.
While high mortgage rates were considered linked to the market's anxiety over the result of the election, rates have remained high even after Trump was declared winner. From now on, mortgage rates could either rise or drop depending on which policies Trump chooses to prioritize once in office, and how the U.S. economic conditions evolve, Zhao told Newsweek.
"If the economy weakens, rates will drop as the Fed will cut more, but if the economy remains strong, rates will stay elevated," she said. "And the more tariffs or tax cuts are increased, the higher rates will go, but if those plans are scaled back, rates will drop."
In the near to medium term, according to Zhao, mortgage rates are likely to be more volatile "because Trump talked about many policies that would have a significant impact on rates," she said. "Rates will be volatile as we all learn which policies are most likely to be enacted," she continued.
"For example, the two most important policies from the perspective of rates are his proposals to increase tariffs and tax cuts. The more tariffs are increased and the more tax cuts are signed into law, the higher rates are likely to go," Zhao argued. "The process of enacting these policies will keep rates volatile because expectations about the size and scope of the changes will bounce around."
Lighter Regulation and Tax Incentives For Homebuilders
Some of the policies Trump discussed during his election campaign include lightening up regulation around homebuilding and offering tax incentives to those looking to increase inventory. Realtor.com shared estimates suggesting that the total cost of regulations at federal, state, and local levels of government add more than $90,000 to the price of a new home.
Trump's efforts to reduce regulation "could make it easier for builders to add homes at lower price points, potentially accelerating a much-needed trend that is already under-way," Hale said.
"Expanded supply could also come from making federal lands available for housing development, a Republican Party platform commitment and idea Trump discussed while campaigning. Together, these ideas could help builders make headway on the housing shortage that has largely only widened over the last decade."
But even these potentially positive policies come with a caveat, Zhao said.
"Lighter regulation and tax cuts could certainly help builders build more homes, which would ultimately benefit homebuyers," she told Newsweek. "However, many of the regulations that affect home builders are controlled by local governments, so the federal government is limited in its ability to affect builders," she added, "though it could certainly lean on local governments to relax regulations."
Higher Cost of Homebuilding
Some of Trump's campaign promises for improving the country's economy—increasing tariffs on imported goods and curbing immigration—are likely to bring up the cost of building new homes in the U.S., according to experts, at a time when Americans desperately need more inventory to improve affordability.
"If President Trump increases tariffs on the inputs to building a house—for example, lumber—, then the cost of building a home will increase," Zhao said.
"Similarly, if construction labor costs increase because there are fewer construction workers because of immigration restrictions, the cost of building a home will also increase," she added. "Whether those increases are passed on to home prices depends on market conditions. It may just be that builders build less."
Hale also said that Trump's efforts to improve affordability by curbing illegal immigration could backfire, leaving the homebuilding sector short-staffed and consequently increasing the cost of housing.
"In the short-run, reducing immigration could severely hurt the labor supply needed for new home building since up to a third of residential construction employment consists of foreign born workers," Hale said.
"In the long-run, reducing immigration could lead to negative population growth in the U.S., since the total fertility rate nationally in the U.S. sits at 1.67, well below the population-sustaining rate of 2.1," she added.
"In other words, without immigration to fill the population replacement gap, the country would likely see falling aggregate demand for housing. The consequences of that could include a reduction in homeowner's equity via falling home prices and a contraction of employment in the homebuilding sector, which could have spill-over effects to the broader economy."
In the short term, essentially, not much is expected to change after Trump returns to the White House. Home prices are likely to continue climbing as supply remains tight, and volatile mortgage rates are expected to make both buyers and sellers cautious. In the long term, things could get better or significantly worse—but that would depend on what Trump decides to prioritize once in the White House.
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